 "Nikesh Arora")
The tally for Nikesh Arora's two-year tenure at SoftBank Group is becoming clearer: 31.5 billion yen ($300 million) in compensation and related expenses.
The Japanese tech firm booked 6.8 billion yen in expenses arising from Arora's resignation last month, SoftBank said in a statement on Thursday. That's on top of 24.6 billion yen he received in compensation over the previous two fiscal years. In addition, the firm bought back 10.7 billion yen of its own shares from Arora, who served as SoftBank's president and wasn't its top executive.
Not only is the headline figure an unprecedented number in Japan, it's also large compared to US executive compensation packages. Marissa Mayer, the chief executive of Yahoo!, was paid $109.6 million over the past three years, even as the company struggled before its main internet business was sold off. Arora's compensation rivals those of Apple's Tim Cook and Walt Disney's Bob Iger.
Arora left SoftBank after CEO Masayoshi Son, who had called him a likely successor earlier this year, decided to remain at the helm of the company he founded. At a news conference following SoftBank's quarterly earnings report, Son defended Arora's compensation, citing new investments led by his former deputy in India and China and his role in reorganising the company's asset portfolio.
"Look at the fundraising rounds that followed our investments, they are valued at a new level by outside parties," Son said. "That's an extremely high return on the scale of hundreds of billions of yen."
Arora spearheaded investments in Indian e-commerce provider Snapdeal.com, ride-hailing service Ola Cabs, real-estate website Housing.com and hotel-booking app Oyo Rooms. In October, SoftBank led a $1 billion fundraising round for US-based online lender Social Finance.
Son also pointed to Arora's role in arranging the sale of SoftBank's stakes in Supercell Oy and Alibaba Group Holding. Proceeds from those divestments made it possible for Son to embark on the largest bet of his career so far - the $32 billion takeover of ARM Holdings that was unveiled this month.
"Nikesh was in command of Supercell sales and liquidation of Alibaba stake," Son said. "That contribution alone is more than enough."
| COST TO COMPANY |
|
SoftBank Group's first-quarter profit rose 19 per cent as proceeds from selling part of its stake in Alibaba Group Holding helped make up for losses at Sprint.
Net income at the Japanese wireless carrier rose to 254.2 billion yen ($2.4 billion) in the three months ended June 30, the Tokyo-based company reported on Thursday. SoftBank's operating profit was 319.2 billion yen. Sprint reported a $302 million loss in the quarter as the money-losing US carrier focused on growing its subscriber base over profit.
The gradual turnaround at Sprint has been overshadowed by SoftBank founder Masayoshi Son's $32-billion deal for chip designer ARM Holdings. The company's biggest ever acquisition and the departure of Arora have left investors wondering about Son's strategy for a company burdened by more than $100 billion of debt.
"The ARM acquisition will have a major balance sheet impact in the short term and there has yet to be a satisfactory explanation of how and when it will become a core business for SoftBank," Tomohisa Nonomura, an analyst at Toyo Securities, said before the earnings announcement. "Sprint recovery is picking up steam. We can now consider the timing of their return to profit. Domestic operations continue to generate steady profits."
The company didn't issue forecasts citing "uncertain factors".
SoftBank posted gains of 204.2 billion yen in the June quarter, mainly on trimming the Alibaba stake with further profits expected in the current period. Even after the sales, it remains the biggest investor in China's e-commerce giant.
Income from SoftBank's Japanese telecommunications business jumped 11 per cent in the June quarter. While average revenue per user for its main phone business in Japan fell to 4,610 yen in the quarter, the company added 112,000 users, taking its total subscription base to 32.1 million.
Son has depended on growth at home to help fund the turnaround of Sprint.
Sprint booked its sixth straight quarter of subscriber gains, adding 180,000 monthly subscribers with shares of the Overland Park, Kansas-based company rallying 28 per cent the following day. Sprint Chief Executive Officer Marcelo Claure has attracted customers through some of the industry's most aggressive promotions, including half-price offers.
"I plan to dedicate the majority of time going forward to Sprint and ARM," Son said on Thursday. "ARM will remain an independent company, keeping its own business model, brand and management. We are not planning to send over our executives, but would like to share our wisdom."
Investors remain concerned about SoftBank's balance sheet and the hefty premium it's forking over. SoftBank is paying a multiple of almost 53 times the UK company's trailing 12-month earnings before interest, taxes, depreciation and amortisation. That's more than twice the median of other deals in the sector.
